Argentina Stuns Bondholders With Scorched-Earth "Cramdown" Plan

With the impasse over the latest Argentina default going nowhere fast, late last night president Kirchner stunned its creditors when she announced what amounts to a cramdown plan for holdouts, in which all bonds would be stripped of their existing indentures and converted to local law bonds. Or, as some would call it, a "scorched earth" transaction that burns all bridges, and goodwill, with the international creditor community and likely leaves Argentina unable to access global capital markets for the foreseeable future.

As part of its transaction Argentina would bypass the order issued by Judge Griesa halting payments to all creditors, not just the holdouts, and resume normalcy for the 90%+ of restructured bondholders while leaving Elliott, Aurelius and the like with little to no recourse aside from holding on to claims which would be two swaps behind, and with essentially no legal standing as it would completely bypass the Bank of New York (whom it would remove as trustee) custodian payment process and allow Argentina to make payments directly to those creditors it sees fit.

In essence, what Argentina plans to do is the opposite of what Greece did in 2012 when it defaulted on existing bonds, and swaped over into English-law bonds as an incentive for existing creditors, in effect promising it would never do it again. What Argentina has just shown is how easy it would be to "cramdown" bondholders who thought their "strong" covenants were safe when in reality all it takes is a government order to strip any and all of their indenture protection. Needless to say this has a very negative implication for Argentina's future ability to raise capital in the international arena for the near, and longer-term (at least until the ZIRP yield junkies come crawling back hoping to collect 10% if only for one year; the year after that will be some other Portfolio Manager's problem).

According to Bloomberg, the government will submit a bill to Congress that lets overseas debt holders swap into new bonds governed by domestic law with the same terms, President Cristina Fernandez de Kirchner said in a nationwide address yesterday. Payments will be made into accounts at the central bank instead of through Bank of New York Mellon Corp., the current trustee.

Holders of Argentina’s $30 billion of overseas bonds have been in limbo since U.S. District Court Judge Thomas Griesa blocked the nation’s attempt to pay $539 million in interest due by July 30. His ruling was meant to compel Argentina to resolve unpaid debts from its 2001 default. While most creditors agreed to provide debt relief, hedge funds led by billionaire Paul Singer’s Elliott Management Corp. refused and successfully sued for full repayment in U.S. court.

“The bigger picture hasn’t changed at all,” Will Nef, who helps manage $3.2 billion of emerging-market debt at Union Bancaire Privee in Zurich, said by phone today. “Argentina is still locked out of international credit markets because the issue with the holdouts remains unresolved.”

It may well be locked out, but if this plan goes through, it will remain in the good graces of its restructured bondholders, while taking the last bit of leverage the holdouts have. However, what is worse are the negative implications for international bondholder contractual terms.

Bloomberg has more on the details of the actual proposed swap:

Argentina plans to create a separate account for the holdout creditors such as Elliott, who own 7.6 percent of debt from 2001 and didn’t accept the government’s previous debt swaps. Payments for holdouts would be deposited under the same terms as the rest of its restructured debt, regardless of whether they decide to accept the swap.

Creditors opting to keep their notes will also get payments locally under the plan, Fernandez said yesterday. Stephen Spruiell, a spokesman for New York-based Elliott, didn’t immediately reply to an e-mail seeking comment.

Daniel Pollack, a court-appointed mediator for the talks between Argentina and the holdouts, didn’t immediately return an e-mail seeking comment on the government’s proposal.

Curiously, alongside the announcement, with the situation suddenly quite "fluid", ISDA pushed back the date for the auction to settle Argentina’s credit-default swaps to after Sept. 2 from Aug. 21, according to its website. Argentina’s failure to pay interest on its bonds triggered a credit event and settlement of $1 billion of the default swaps.

Amusingly, as Credit Suisse's Casey Reckman summarizes, and who was quite negative on the announcement as per his overnight note, the Argentina plan would likely result in what is a contempt of court to Judge Griesa. From Bloomberg:

Foreign-law exchange bonds could be dropped from main Emerging Markets bond indexes if operation is completed, which could lead some investors to sell their holdings, Credit Suisse economist Casey Reckman writes in report.

Strategy could indicate reduced govt willingness to settle with holdout creditors once the Rights Upon Future Offers (RUFO) clause expires at year end

Sees increased risk that govt will leave the holdout issue for the subsequent administration to resolve

Debt swap would likely violate U.S. Judge Thomas Griesa’s orders against evading his pari passu ruling, which could result in Argentina being held in contempt of court

U.S. based financial intermediaries and investors could be wary of risking contempt themselves if they were to participate

While contempt of court may have few practical implications, it could further limit the already reduced potential for foreign financing flows until situation is resolved

Renewed motivation for settlement would probably have to be driven by economic circumstances, namely a significant decline in international reserves that threatens govt’s ability to continue servicing its USD-denominated obligations

In other words, in order to preserve some optionality, what is next on Elliott's agenda, would be nothing less than crushing the Argentina's economy, depleting the central bank's reserves, which at last check were just under $30 billion, or a little more than Elliott's AUM, and send the CFK administration packing.

Can he do it? We eagerly await to find out. In the meantime, any Argentina "assets" abroad, be they naval or otherwise, are once again fair rehypothecation game.

Finally, keep an eye on the Argentina bond market where this development will likely play out on accelerated basis, now that Argentina has confirmed it will play "scorched earth" hardball with creditors.

I would not place any bets on a "scorched earth"-situation. Bond holders might accept this offer before losing all. Might lead to increased rates for Argentina though.

Most interesting to see how they try to strip power away from Wallstreet. Next time they offer bonds denominated in CHF, CNY or even RUB ... ;-) Anyway, US war ships have already been put to sea, I guess.

But when the US defaults and/or Trillions of Derivatives default, it will be "Unfortunate but unavoidable"? By then, your paper will be worthless and there is a very good chance that your Bank Accounts will have been confiscated. ALL Governments are bankrupt. Act now.

Anything that backs away from Wall Street and all the greedy shysters is probably good long term. Might suck in the short term, but hey at least she's not turning to the same ones who got them into this mess for the solution.

Argentina has its share of Oligarchs too, like most Latin countries. The difference between them...

The difference ... is whether these Oligarchs are enlightened or not. The ones who are, will think more in National terms and work with others of their kind to build a better nation. The ones who aren't, will seek only to fill their own pockets (every scumbag for himself mentality).

Which camp they fall into has everything to do with how much they were held as infants, and how they were raised. If their parents were 'lizards' or parasites, they will be too. IOW, it also depends on the Worldview of the household they grew up in. If their allegiance is to Argentina and they see themselves as Latins, fine. But if they see themselves as "something apart' (e.g. Global Zionists), then they will be only Extractors, not Builders.

Maybe it dawns on women faster that hey, where a country and I'm the leader we decided who will get what and what amount. And if we default, so what better luck next time. I mean the only thing that is worse for her is thta the people will see that she stood up for them. A win win for her.

Well...Argentina has definitely suffered a loss. US Banks have little in the way of enforcing their rulings. Don't think the US Marshal's are going to make a difference with Buenos Aires.

There is the "slight" problem that Wall Street has trillions in capital availability right now...to be lent out at ridiculously low yields I might add. "Size matters" when it comes to extending capital...especially when you're talking the needs of a State. I would have advised to cut the check and get moving on oil, natural gas, beef, soybeans, etc before the price falls further.

The Russia to Argentina to China deal is an interesting one...but the amounts of actual product that would be involved are pretty much de minimus relative to say Australia.

The problem still seems like one of final demand not one of resource scarcity.

Jerome Daly argued the same case in MN. The judge found that this was a valid argument. Of course he died 6 months later from poisoning and the ruling was overturned on appeal but for a few short months it looked like money created by a ledger entry on a bank's balance sheet and then lent out was not going to have to be repaid. An interesting read.

What Kirchner missed was that she could have just declared all the bonds null and void using the legal principle of consideration. Since these bonds were created out of thin air by banksters, there is no consideration and so Argentina actually has no legal obligation to pay them back.

What Kirchner missed was that she could have just declared all the bonds null and void using the legal principle of consideration. Since these bonds were created out of thin air by banksters, there is no consideration and so Argentina actually has no legal obligation to pay them back.

<<What Kirchner missed was that she could have just declared all the bonds null and void using the legal principle of consideration. Since these bonds were created out of thin air by banksters, there is no consideration and so Argentina actually has no legal obligation to pay them back.>>

Money is measurement backed by murder, which has developed into the globalized form of enforced frauds, where governments enforce the frauds of private banks being able to make more "money" out of nothing as debts. Basically, the powers of governments were due to the history of warfare, which created triumphant military organizations with the power to tax, as well as to enforce legal tender laws. Those powers were gradually captured by the best organized gangsters, the banksters, who were able to systematically apply the method of organized crime to capture more and more control over the political processes, as well as other social institutions, such as the mass media.

The basic systems were that money made out of nothing as debts were the ways that fraud was legalized, and enforced by governments, so that natural resources could be systematically robbed through the runaway ability of credit based on really nothing but the power of governments to enforce the fiat money frauds being able to back that up. Thereby, a globalized civilization has become criminally insane systems of legalized lies, backed by legalized violence, spinning out of control. Countries like Argentina are merely leading the ways towards the psychotic breakdown of those established systems, where the ability to back up frauds with force works less and less well over time.

It remains to be seen how the CIA, etc., (which was originally made and still controlled by the banksters) could ever overthrow the Argentinian government, in order to reinstall political puppets which would cooperate with the international bankers' systems, by enforcing more frauds against the Argentinian people. The obvious problems are that system of debt slavery generates numbers which become debt insanities, which are mathematically impossible to resolve anymore.

Argentina has ALREADY been sucked into the black hole of enforced frauds, which is simultaneously sucking everyone else into that black hole, which is primarily due to civilization actually being energy systems based on the principles and methods of organized crime, operating in ways that the vast majority of people did not understand, and were conditioned to not want to understand.

Americans appear to be headed to be flushed down the same toilet, due to their own system of bankster driven debt slavery generating numbers which have become debt insanity. The ability of private banks to legally counterfeit the public money supply, while governments forced everyone to accept that, has driven the entire globalized civilization stark raving mad. In that context, there are no good reasons to believe Argentina will be able to pull itself out of the black hole of debt slavery becoming debt insanity, because the international bankers will be doing everything they can to continue to increase the gravity of that situation.

Basically, this whole article was written from the biggest bullies' bullshit point of view. The bond holder tend to be the pyramidion people, dominating the long established systems of sophisticated social slavery. Their monetary systems were primarily based on triumphant organized crime, enabling private banks to make money out of nothing, as debts, when they extended credit to others, such as to Argentina.

The basic insanity of the social situation is due to the basic ways that the facts about human life are deliberately denied and ignored as much as possible by the dominating social systems. Human realities were always organized lies, operating robberies. However, those who were the best at doing that were able to legalize their lies, and back those up with legalized violence. Therefore, Argentina is comes to terms with the tragic trajectory that everyone else all over the world will also have to come to terms with.

I expect the established systems to have to go through more severe social storms, and psychotic breakdowns, because more radical truths to face the FACT that those creditors' banks provided nothing but money made out of nothing, to create those debts, can only be understood as the triumph of organized crime, at the highest levels, whereby the biggest gangsters were the banksters, able to dominate governments to legalize such massive crimes that everyone is now being sucked into the social black holes of those runaway enforced frauds!

Most people have to work for their money, and delusionally believe that somehow that wealth was being loaned, and therefore, should be repaid. However, almost all money was actually made out of nothing as debts. No only is it arguable there is a doctrine of odious debts, to say that fraud should not that be repaid, but also, that basic debt slavery system has reached the point of debt insanity, where it is no longer possible to be repaid.

The global monetary system has become a metastasizing cancer, or a parasite killing its host. All the ordinary people who were working for their money, and believed in the values that money represented, have gradually been overwhelmed by the runaway triumphs of the legalized frauds of making money out of nothing as debts. Argentina is merely one of the peripheral countries which was leading the way for the human species to crash into the wall of debt insanity, and bounce off the cliff of consequences, whose final outcome can not be seen at the present time ...

At the bottom, money is measurement backed by murder. It is not clear at the present time, in a globalized system of electronic frauds, backed by the threat of the force of atomic bombs, how utterly insane the possible resolutions of these problems are going to become. After one faces the FACT that there was NO genuine consideration in the contracts to lend "money" made out of nothing but debts, there is no clearly coherent way how to fix up the resultant problems caused by prolonged social domination by systems of enforced frauds.

Surely, repudiating odious debts in one idea. However, since the debt controls were backed up by the death controls, it is not apparent how those who repudiate odious debts are going to deal with the backlash. Argentina being cut off from the supply of more money made out of nothing as debts is a serious problem, when all the rest of world operates its systems of robbing resources through that kind of credit system, which was made and maintained by the biggest and best organized gangs of criminals, namely governments controlled by the banksters.

RM, the only Google entries I find for that appear to be yours. Great phrase, sounds like it comes from a future story-book, provided there will be people around able to recollect our present as a past.

The Pyramidion People should understand that the social pyramids are actually toroidal vortices, which makes them most responsible for recycling the wealth pumped up from the bottom back down to the bottom. Tragically, the current crop of Pyrmaidion People seem to have become criminally insane, and therefore, are astonishingly able to deliberately ignore that what goes around comes around!

I like to daydream that, someday, "The Pyramidions" will operate in a more enlightened way. However, at present, they appear to me to have become egotistical madmen! Unfortunately, the only test in the past for getting to the top of the social pyramid systems were to be able to be the best at dishonesty, and backing that up with violence. Their real roles as the controlling components of the overall social pyramid systems appear to have mostly gotten lost in their struggles to fight to make and maintain their position at the top of those social pyramid systems!

The ability to control the government through applying the methods of organized crime has tended to wipe out the ideal role of politicians as serving the public interest. Instead, almost all of our politicians have become puppets, who are NOT "The Pyramidions," but rather lower level pathetic political puppets, whose only job is to fool enough of the masses muppets, enough of the time.

IF only the majority of people had not been reduced to being Zombie Sheeple, then "The Pyramidions" might be wise, however, obviously, that is NOT the case now, where "The Pyramidions" get to operate behind the scenes, while manipulating others to put on the bad show business of political puppets pretending that they are "The Pyramidions," when they are obviously not.

Theoretically, President Obama should be one of "The Pyramidions." However, it is a cruel joke to assert Obama actually is in control, when he is obviously a puppet of the banksters. Obama seems to be not much more than the "Golfer in Chief," who sometimes takes break from golfing to read a teleprompter.

In that context, I wonder whether Obama is even helping to keep the golfing related businesses going?

Always makes people smile when a douche like Singer takes a kick to the financial nuts.........no matter how dirty a player you are, very hard to win if the other party can just move the goal posts on you.

Will Judge Griesa hold Kirchner in contempt and send the U.S. Marshals to Buenos Aires to arrest her? Will Judge Griesa finally retire? Will Paul Singer stop writing his demented observations on world affairs? No to all three. Meanwhile, Citibank's balance sheet could take another hit if Argentina lifts Citibank's license, according to a earlier ZHcomment linking to the New York Post story.

<<Needless to say this has a very negative implication for Argentina's future ability to raise capital in the international arena for the near, and longer-term (at least until the ZIRP yield junkies come crawling back hoping to collect 10% if only for one year; the year after that will be some other Portfolio Manager's problem).>>

The BRICs now stand to benefit directly from every fiasco like this, and from every SWIFT shenanigan the Anglo-Americans try. Now that the foundation is in place, they can act as 'white knight' or 'decider', since they will become the next resort after the IMF. They can act as white knight for anyone they feel would increase their power, and Argentina may well be a good candidate.

The BRICs is the 'alllied front' in the currency war that is the main stage for WW3 IMHO. I'm looking for the BRICs bank to begin, slowly, taking over from the IMF as global 'decider'. Not sure I like that much better since I don't want ANY global 'decider' allied or not but nobody consulted me first. I'm expecting also to see the Eurasian Alliance slowly crystallise as the effective counter-balance (and future displacer) of NATO. (Says this armchair speculator, whose opinion plus $5 will get you a nice coffee.)

No, you're on the money. I think the BRICS plan to ingratiate themselves to every country that has been fucked over by the IMF, which is a pretty long list. Much easier to win friends with carrots than sticks.

"Not sure I like that much better since I don't want ANY global 'decider' allied or not but nobody consulted me first. "

No, life doesn't work like we wish that it would. Sucks, but there you have it.

The BRICS challenge to the Anglo/American Global Banking and Military Regime, AKA the Empire, is the only force powerful enough to restrain it. Argentina would not have been able or willing to challenge the ruling of a judge in a regional US court without having BRICS to fall back on, because that local New York Judge and a garden variety New York billionaire are backed by the power of the Empire.

@Renfield: "...I'm expecting also to see the Eurasian Alliance slowly crystallise as the effective counter-balance (and future displacer) of NATO."

That's why I commented yesterday (5115508) that a Central Asia Treaty Organization (CATO) should be formed, "For a strong and secure Central Asia". Other regional treaties to follow, e.g. SATO (S.Am. Treaty Org). No, not South Atlantic Treaty Org, as the Latinos want nothing to do with the guys on the other side of the pond. Let Africa and every continent take care of itself, to handle a super-power bully (like the US and their multi-national Oligarchs).

Good for them. They were strong armed into this position thanks to Elliot Singer, who I'm sure paid off a lot of judges, whom he should be on the hook to the creditors that did exchange their bonds on the last default. If I were one of the creditors, I'd hand Elliot Singer over to ISIS.

Yeah - shame on him. Buying bonds on the terms Argentina offerred and expecting them to play by the rules. It's like the dastardly GM bond-holders, expecting the rule of law when union jobs were at stake. Evil Bastards!

Pretty much. This is just the beginning. Wait until Japan and Europe go. Do creditors *really* believe they will get their promised returns?

This coming debt implosion is going to be fucking fantastic. So many ridiculously wealthy retards (mostly inherited wealth) are going to get the shaft so hard. I have a crate of popcorn waiting.

Will be chowing down with a big grin on my face right until the draft orders come sailing through the letterbox. Only because part of me knows that, whereas most youngsters have had a monster-sized debt fist jammed up their ass since the mid nineties, these fuckers have been living it up like never before.

Why worry? Worrying assumes that there is something you can personally do to avert this possibility? If you are an average citizen chances are that this is slim unless you can find some obscure loophole, or a corner of the world that the onset of the coming debt crisis won't touch?

The coming confluence of events is like being on an aircraft carrier with an enormously wide turning circle and hoping to turn around like a speedboat = won't happen.

Just prepare yourself physically, and mentally for what is ahead. Use whatever knowledge/skills you have and try to survive. At that point it is a case of just sitting back and enjoying the ride.

Having taken part in the Vietnam protests as a teenager I have a different perspective. They will either use volunteers and mercenaries for WW3 (which is what we have now) or they risk a powder keg in the US as folks like me tell their sons (and daughters) to give the TPTB a big middle finger and expose the giant ponzi for what it is.

Exactly. TPTB are true psycopaths but I believe that their greed is foremost. Therefore I don't think they will risk all out nuclear war. This would not be in their interests as there would be no one left to steal from or to grow their food (and make their ferraris). Plus they have so many other ways to depopulate the earth of "useless" eaters (bio-engineered plague, vaccines, flouride in the water, GMO food, psyops, FEMA camps, debt-slavery, etc., etc.).

Exactly! And all bonds to corporations which employ union workers turn out to be unsecured too! If you have money - you should really just give it away and maybe some of the organizations you give it to will give you some back. After all, that's whats going to happen to people who loan money to their local bank!

He bought the bonds after Argentina defaluted and the majority of bond holders agreed to the exchange, so no he didn't buy the bounds on the initial terms as he wasn't an original creditor. He is picking up pennies infront of the steamroller, and he tied up those holders that exchanged and left them in the path.

What I'm saying is the majority of holders accepted the new bonds in place of old bonds. Some sold their old bonds to Elliot and he knew he was buying defaulted bonds, so he took a risk to try to make as much money for himself at the expense of those that did exchange their bonds, and since the majority agreed to the exchange, the new bonds should have been able to be paid on before the defaulted contracts, as in those contracts were already defaulted on so they were worthless, and not at par.

Are we going to erase history and get a "do-over" for GM bondholders and other creditors/stakeholders, who were wiped out?

Of course not! It is a "'Murican" corporation, it is "too big to fail", it is... (fill in the excuse blank)

Sorry to say, but the GM wipe out was not the work of those evil unions of working-class people. If you dig deep, you will find that they got shafted just as hard, if not harder, than everyone else. You cannot reduce a very complex bankruptcy to "the unions did it". I know your mind probably seeks out a simple reason and a convenient scapegoat, but life doesn't work that way, and the real heavy-hitting culprits behind the scenes completely escape your (in my view, completely justified) anger.

-----------------------

On Argentina-

Singer and his fellow vultures never loaned a dime to Argentina. Singer and his fellow vultures were not even part of the class of investors originally affected by the default! They swooped in at the low point after Argentina defaulted and bought out the panicked and desperate weak hands before Argentina restructured their debt.

To see things in their proper perspective, it is important to understand that NML Capital, a subsidiary of Elliot Capital Management, run by the billionaire Jewish lawyer Paul Singer, owns only 1.6% of the total debt.

They knowingly bought the bonds after the default for mere pennies on the dollar and then turned around and demanded to be paid the full face amount and vig. These vulture jackasses are just that special and full of chutzpah; they have to be paid in full on a debt that defaulted over a decade ago. These vultures have been spectacularly successful in fucking over other foreign, brown people's governments in the Congo and Peru with this very same playbook.

Incredibly, a New York judge (Thomas P. Griesa) held their hand, wiped their tears away, and whispered soothing, reassuring thoughts into their ears. Griesa then turned around and re-wrote history after the fact. The judge essentially erased the default from history and demanded a complete "do-over" on the defaulted bonds, ruling that Argentina had to pay the full face amount of the bonds plus vigorish.

The problem is that if the "special people" get paid in full, the other creditors (93% of bondholders) will have to be treated equally. This would force Argentina to effectively re-assume a crushing defaulted debt. Singer himself would have made a killing just by accepting the restructured debt payment terms, but that is not good enough for a psychopathic necrophiliac like him, the greedy billionaire bastard has to have it all.

Judge Griesa went further than that, though. He blocked interest payment for the 93% of bondholders who had restructured, by freezing the money Argentina deposited in the New York Mellon Bank to cover their restructured interest payment. The Judge ruled that whenever Argentina paid the exchange bonds, it also had to pay the holdouts (Singer et. al.) He deliberately screwed over an innocent party that had already reached an agreement years before and is not part of the suit, to force the issue and put pressure on Argentina to heel.

Mellon Bank is thoroughly fucked; they are the bag holders and have lost all future Argentinian (and probably Latin American) business for at least a generation. Further, Argentina has discharged their legal obligation to the creditors by releasing the money to the agreed-upon agent. Argentina has washed their hands of it, and it is now up to the 93% of bondholders to bring suit against Mellon to overturn the judge's order and force Mellon Bank to release their money.

This "non-payment" which in the real world was in effect, a timely "payment" blocked by Griesa, pushed Argentina into a widely publicized "default" that in the real world is really a "non-default". With the apropos media spin, this affected their credit rating by the "pay to play" US rating agencies and their ability to access capital at lower rates, further pressuring Argentina.

Griesa's sparse, legally unsubstantiated decisions were widely seen as throwing his hands up and punting to a higher appeals court. The problem is that the Supreme Court did not review it, and this horrific Frankenstein of a decision stands as legal precedent!

This is understandably considered by the Argentinians as a metric ton of horseshit and rank extortion by an activist court, which only stiffens their resolve to not take it up the ass on this.

So much for "creative destruction", "caveat emptor" and "free markets" huh? In one grand legal sweep, Griesa did away with credit risk and practically all other risk types.

This legal fantasy would only encourage Singer and his fellow necrophiliacs to just buy the newly defaulted bonds again (if they were issued under US law, which I doubt anybody in Latin America will ever do again), knowing that they would be coddled and make an even bigger killing down the road. Furthermore, this would establish the legal precedent that a foreign country who issues debt under US jurisdiction cannot default- ever*.

Weeee! Undying Zombie debt and risk free investing for all!

Hip, Hip, Hooray!

Griesa! Griesa! Griesa!...

*That is, unless it is an Anglo country or corporation; then a different rule of measure applies...

Therefore, if ARG sends payments to Bondhholders of Record prior to the Default, the Loop is completed.

Junk/Default Scavengers will either have to accept a modified payment or get left out.

ARG "Frees" itself from the Anglo-American Branch of the Banking Cartel.

It may even be safe to speculate that BRIC may step in to assist moving forward - considering the Trade Deals ARG was working on with CHN and RUS. The Food Import Sanctions by Mr. Putin gave ARG Agri-Types a massive boost.

BRIC Dev Bank(s) making a major impact on ARG's Economic Boost. Other Nation-States see that; and start visiting their RUS/CHN Embassies to crank up more business.

As long as TEAM_BRIC do no pull off blatant NSA-esque Spying Scams on their Clients, they should be well off. So simple.

Sending payments to the "bondholders of record" instead of the vultures is an interesting scenario, but I doubt it will happen. As we all know, bonds are transferable, and the "bondholders of record" forfeited any legitimate claim when they sold them to Singer. Legally, and for all intents and purposes, they are out with no recourse.

Something very important that I failed to mention in that long post was that the Rights Upon Future Offers (RUFO) clause in the exchanged bonds’ contract, which says that the 93% of debt that Argentina did restructure cannot get worse treatment than the other 7%, expires on Dec 31, 2014.

If this deadline passes with no settlement, several things happen that make things difficult for the "holdouts". Argentina dodges the default bullet, and will no longer be obligated to pay the 93% whatever they pay the vultures. This will cause Singer and his minions to lose leverage and fall into a weaker negotiating position, because he loses the ability to bully the country into paying him in full with the threat of a new default hanging over Argentina’s neck.

Argentina might then turn around and:

Pay the vultures off in full and be rid of them (I doubt it)

Offer them the same terms as everyone else (very likely)

Make them an absolutely humiliating low-ball offer (possible)

Flat-out repudiate that small portion of the debt and impale the vultures (possible)

There is a lingering problem though. Although he bought the bonds at rock-bottom prices, Singer is not content with making a killing by taking the same terms as everyone else. Over many years he has become personally invested and emotionally involved to such a degree that reputation, pride, and ego might affect his ability to be rational, accept victory and reap less than the absolute maximum profit.

The cost basis of the investment is not even a factor in determining the payoff, because the maximum possible profit keeps getting larger and larger. The vultures have had a stunning and unbroken string of victories in the friendly New York courts, having won 11 claims in a row, including massive "punitive damages" which number in the billions of dollars.

I am serious when I say that it would not surprise me at all if the vulture funds went back to the New York court to tack another zero at the end of their "entitlement" sum after this latest victory.

Griesa's court order is seriously flawed, yet it stands and will not change, at least for the time being, since the Supreme court ruled on two key points by writ of certiorari. The action returns to the lower court now, but perversely enough, the flawed Griesa decision was powerfully bolstered by Justice Antonin "the Beast" Scalia's (malicious, in my view) commentary of opinion.

Scalia effectively gave Singer and his vultures the green light, and egged them on to attempt worldwide seizures of Argentine assets; "wherever the national law permits", of course. He actually went further, cleverly separating "discovery of assets" to "seizure of assets" and stated that the vultures can get access to a wide array of bank records to target and locate those financial assets overseas that they might be able to seize as "compensation".

This shortsighted and harebrained line of thinking is predatory capitalism at its worst, and the implications are enormous.

Scalia's certiorari majority opinion (7-1) on the two points presented to the Supreme Court, along with Justice Ginsberg's brief dissent can be read here.

well, if they need to borrow money from Western banks. If whatever BRICs bank that exists were to extend some credit to anti-dollar countries that are wrapped up in the established credit markets it could get interesting.

Since their debts would also be forgiven, they might be able to live without the SS and taxpayer-funded pensions...

The debt-run society requires entitlements. Just like it requires more and bigger loans, and low interest rates so people can get those loans...etc.

SS and expensive pensions are required to keep the game going, not because they are so indispensable.

Like flood insurance is required if you live in a flood zone. But when you realize that you don't HAVE to live in a flood zone, you understand that it is only required if you CHOOSE to live in one anyway.

So move. And a debt reset would accomplish the same thing...moving from an area you don't HAVE to live in (economically speaking) to one without all the unnecessary overhead.

I think it means that South America will trade with South Americans and China.

I do business in Brazil, Americans really don't understand what poverty and oppression is. Americans also seem to forget that South America is a huge exporter of Oil. In short, Americans need to be careful what they wish for.

"If anyone hurts any kids around here I'll set a flame to every corporation."

...and what country is "here" that you are referring to? If it is the US, have you been locked in a closet for 50 years? Try reading the news...start with the HuffPo Crime page...that should get you off to :flammin'"...once you stop vomiting....when your done, go to davidicke-dot-com....

These bankster Reptiles are pig-fucking, pedophile trannies....(and not DOW transports)...